Changing Categories Could be an Option for Banks In Category 2

Changing Categories Could be an Option for Banks In Category 2

The Neue Zuercher Zeitung explores the alternatives that Category 2 banks of the US Program have at this stage, i.e. after receiving a draft of a Non-Prosecution Agreement (NPA) asking for full cooperation without an end date. People familiar with the matter state that the NPA cannot be signed in its present form and contradict the agreement signed in August 2013.

The reaction to this can be many fold:

The banks can stay in Category 2 but negotiate the NPA and cooperate only within the framework of Swiss laws. As a group the banks could join forces to go back to the DoJ to clarify and adjust the various points affecting them all.

Observers say that they could ask to join the Category 1 which are the banks that were already under investigation by the US Department of Justice (DoJ) when the US Program framework was signed in August last year. Those banks deal on a one-to-one basis with the DoJ to come to an agreement, set a fine amount, and not have to comply to this model NPA.

Another potential move is from Category 2 towards Category 3. However, this move is risky as the DoJ already warned that one undeclared client in the book would trigger prosecution. In case of a future prosecution, the DoJ would need to show the clues for the accusation.

Another alternative chosen by some banks is to leave the Program altogether.

Some banks chose to not join the US Program. Time will show if they were right.